Identification of early events that contribute to the establishment of chronic lung disease has been complicated by the variable involvement of the airway and alveolar compartments in the complex physiology of end-stage disease. In particular, the impact of airway injury on alveolar integrity and function has not been addressed and would be facilitated by development of animal models of lung disease that specifically target a single cell type within the airway epithelium. We have previously demonstrated that ganciclovir treatment of CCtk transgenic mice, which express the herpes simplex thymidine kinase gene under regulation of the mouse Clara cell secretory protein (CCSP) promoter, results in elimination of the airway progenitor and stem cell pools and a consequent failure of airway regeneration that is associated with rapid morbidity and mortality. In this study, we used the CCtk model to test the hypothesis that selective airway injury initiates profound lung dysfunction through mechanisms that compromise alveolar integrity. Results demonstrate that elimination of the CCSP-expressing cell population results in secondary alveolar inflammation, edema, and depletion of the alveolar type II cell population. On the basis of these data we conclude that selective airway injury can serve as the inciting injury in diseases characterized by severely compromised alveolar function.